Goldman Sachs Hearing - Thread 2

[DemReadingDU]

Thread 1
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8224506

[DemReadingDU]

1. Short break is over

only 2 witnesses, beginning opening statements

[elias7]

2. They keep bringing up Paulson like he was some bigwig prior to the crash

He started his hedge fund in 2008 and was not known to short as a rule. To be fair, if GS had invoked Paulson's name to those parties buying the high risk securities, they would have said, "who?" Paulson became famous because of this deal.

[Mari333]

3. k

[florida08]

4. who are these 2 dudes?

[DemReadingDU]

5. one is the CFO

I'm trying to find a link

[florida08]

6. ok..

was just wondering if they work for GS now

[DemReadingDU]

7. I think so... more

David Viniar, Goldman’s chief financial officer, and Craig Broderick, the chief risk officer.

I wonder if there will be time today for Lloyd Blankfein?

[florida08]

8. possibly

don't think these guys will go over an hour..thanks for the info

[Mari333]

9. they are bullshitting as much as the last bunch

Levin calling them out on it

[DemReadingDU]

10. Links to the other liveblogging sites

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7639304/LIVE-BLOG-Goldman-Sachs-grilled-by-Senate-as-it-happens.html
edit - be sure to look at the image pictures


http://dealbook.blogs.nytimes.com/2010/04/27/live-blogging-the-senate-hearing-on-goldman/?src=mv

[DemReadingDU]

11. This report is being shown on a close-up camera

[DemReadingDU]

12. Levin - reducing risk is the same as going short

[PoliSSHat]

21. This is a joke right?

You have to be smarter then this. There are two sides to every trade. Hedging (ie reducing risk) can be done by either going long or short. Pull out a finance textbook. Its really not that hard.

[DemReadingDU]

29. This was discussed a lot in the 1st hearing

GS would say they lost money going long. Levin would say then you reduced risk by shorting to make money

[MerryBlooms]

32. Have you listened to the series of hearings?

There's more than just selling short going on. You have deliberate fraud of investors, failure to disclose and other shit going on here. You're WAY off base. It's not illegal to hedge, it is illegal to intentionally misrepresent information to your investors and use insider information to manipulate your investors and the mkts.

[alcibiades_mystery]

13. "We didn't make hardly anything - only $500 million."

Yeah, go with that argument Viniar.

:rofl:

[florida08]

15. lol

they must work in a vacuum

[DemReadingDU]

16. Levin: Billions seem large to folks who have lost their homes

edit - maybe Levin said millions, not billions

[DemReadingDU]

14. need 2 more recs. Thanks!

[florida08]

17. wow

I need someone to translate crooked capitalism

[DemReadingDU]

18. also financialese

[florida08]

27. yes

no clue..sounds like 2 balance sheets

[MerryBlooms]

36. That's basically what has been going on

Amend the sheets according to who you're meeting with and scamscamscam.

[global1]

19. Coburn Seems To Be Lobbing Questions To These Guys That Are......

pre-arranged and designed to allow them to make themselves look good. Is anyone else getting that impression or am I just too suspicious.

[MerryBlooms]

40. The republicans are carefully stepping through the minefield

They don't want significant reform, because it's in their best interest to keep the status quo financially, but not a savory concept with their constituents.

[grasswire]

20. I have learned a lot today

Thanks, Senator Levin!

[DemReadingDU]

22. Levin's been on-fire!

really great questions

[PoliSSHat]

24. ...From a guy that doesnt know anything about finance....

Must have a smart aide.

[DemReadingDU]

25. No doubt!

His staff probably sat with Levin and drilled the questions to ask.


and welcome to DU!
:hi:

[MerryBlooms]

41. This whole series of hearings has been incredibly informative. n/t

.

[DemReadingDU]

23. Kaufman's up

Q: Does it concern you that most of the money that GS is making, is from trading, not from investment banking?

A: No.

[DemReadingDU]

26. Kaufman - As smart as you guys are, why short?

unless you knew the housing market was declining.

[florida08]

28. yes

why else? It's used as a hedge but when you have inside info...

[Wilber_Stool]

30. I know nahsing. Vee didn't know.........n/t

[florida08]

31. Bingo

the crisis wouldn't have been near as bad had it not been for the credit default swaps

[DemReadingDU]

33. and there are still gazillions of CDS

This crisis is not over

[florida08]

34. I know

so how in the world are they paying these enormous salaries???

we stand adjourn

[DemReadingDU]

38. Manipulating the market

I think they use computers programmed with special algorithms that manipulate the market upwards. When they get out the gains and pay the salaries, the algorithms will be changed to bring the market down.

[PoliSSHat]

42. Im scared of my computer...

Its going to force me to make money and hose the people!

[florida08]

49. lol

welcome to DU

[DemReadingDU]

35. taking a break for 10 minutes

What did Levin say?

[florida08]

37. he asked

about the "shitty deal" and how did he feel that his client felt that way their product..he replied it was a bad thing to put in an email..the crowed went woooooaaaa

[DemReadingDU]

43. oh, product

I thought he said they were taking a break, and coming back to talk about a quota. duh. He must have said they were talking about the product.

Thanks for the interpretation.


Edit -
"The subcommittee is taking a quick recess for a procedural vote on the financial bill. "
http://dealbook.blogs.nytimes.com/2010/04/27/live-blogging-the-senate-hearing-on-goldman/?src=mv

[DemReadingDU]

39. break over, n/t

[florida08]

44. oh btw

republicans voted against a second time..57-41..no finance bill to debate yet

[DemReadingDU]

45. Why are they so obstinate!

Are the Repubs waiting for the markets to crash, again, before they want to debate finance reform?

[florida08]

48. they're tickin' off the country

they'll have to bend eventually..dems are bringing the pressure on Mathews

[DemReadingDU]

46. Blankfein in the hearing room

Looks like Blankfein will testify today


All heads turned as Lloyd C. Blankfein, Goldman’s chief executive, walked into the hearing room surrounded by over a dozen cameras. He sat in a row off to the side of the panelists, who are still talking. So, it seems, the committee will indeed have the stamina to turn soon to Goldman’s leader.
http://dealbook.blogs.nytimes.com/2010/04/27/live-blogging-the-senate-hearing-on-goldman/?src=mv

[MerryBlooms]

50. This panel will wind up shortly.

I have no doubt we'll hear from Blankfein today. I doubt his testimony will be anymore forthright than the first two panels or the Lehman exec's who testified last week. It's like pulling teeth sans anesthetic.

[MerryBlooms]

47. These men have been well coached by their lawyers

They don't even know how to recognize conflict of interest on their part today. lol I think Lehman exec's. gave the same 'reasoning', last week.

What a tangled web we weave ...

[PoliSSHat]

52. FWIW....

you'd be coached too if you were ever deposed (let alone brought in front of a Senate hearing). Im not justifying any of their actions, but I can certaintly appreciate the caution in their use of words.

[florida08]

55. but they did nothing wrong

so they say..they remind me of republicans..obstructing is what they're doing

[PoliSSHat]

66. Easy there....

Obstruction of justice is a pretty big hand grenade to throw in to the room. You never "win" a case in a deposition/hearing....you only lose it. Thus, these guys have been told to shut up and tone it down. Most would do the same thing...innocent or guilty.

[MerryBlooms]

69. Forget the hip waders

Full hazmat suit w/oxygen is required for this shit.

[Mari333]

61. shit, they are lucky they havent been tarred, feathered, and faced a guillotine

the little bastards.

[PoliSSHat]

63. Wow...

Arent we supposed to be progressive here? Oh well.

[Mari333]

76. ...pffft...

[florida08]

81. LOL

[MerryBlooms]

87. I know it's wrong, but every time I see that ... I giggle. :(

I may need some therapy to correct that particular humor defect.

[florida08]

79. progressive?

you do realize how much money we gave them..not to mention AIG who owed GS money. You can defend them but this is a message board not a courtroom.

[MerryBlooms]

64. I think we all understand that and agree

if you've made millions by defrauding and manipulating the world mkts, we could all afford the mega lawyers it'd take to get us out of trouble.

However, their lawyers and they, do a disservice to themselves with half answers, engaging in stalling tactics, lying and non answers. CEO just said they didn't bet against their own clients - lie - and he knows it, the senators know it, SEC knows it and now we know it. Like I said in a previous post, I hope criminal charges follow the civil.

These exec's. can't even admit to conflict of interest. Disgusting pieces of shit. I hope they all have major security for themselves and their families. As pissed off as some of us are at hearing their bs, I didn't lose everything I own because of them or those shady practices. There are many desperate people in this country who have lost EVERYTHING because of GS or others using the same tactics - they have nothing more to lose at this point.

[PoliSSHat]

74. Im not sure I agree...

As mentioned above, you can only lose in hearings like this...not win. Guilty or innocent, they were trained to STFU. Most people would do the same.

In terms of conflict of interest - explain to me exactly how GS "bet against their clients". They may have been on the opposite side of trades from their clients, but there are no laws prohibiting that nor are there any SEC disclosures rules governing that. What most people dont realize is that as originator of the Abacus deal, Goldman went long the underlying collateral and lost almost $100mm on that trade alone. Paulson made close to $1bn. Would we be having the same conversation if Paulson lost $1bn? In most of these CDOs, the arraigning bank has to keep a position (short or long) to entice buyers of the bonds. Goldman did so in this case

[MerryBlooms]

80. Have you not been listening to the same hearings I have?

Did you watch/listen to the investigation panel who said GS has problems with their non disclosure? Good grief SEC is filing the civil suits - go to bat for these fuckers as much as you want, the fact is, suits are being filed on grounds of nefarious business practices. These people committed major frauds against US investors and world-wide investors. I'm looking forward to other countries bringing suits against these guys, as well.

[PoliSSHat]

85. Have you ever read CDO disclosures?...

I have and they are littered with what is essentially language that says "please do your homework and there are inherent risks associated with buying this paper". Buyers of this paper were QIBs - highly sophisticated institutional investors - not retail investors. Im not justifying Goldmans actions at all, but the lack of knowledge here is a bit troubling. I expected more of a democratic forum.

[MerryBlooms]

93. We all know we need to do our homework when investing

How can you complete your homework if you have an agency who is not disclosing all the information?

Remember WorldCom? Enron? Madoff? Jesus, you want us to do our homework AND have some form of investment ESP? Fuck that.

[Name removed]

97. Deleted message

Sub-thread removed by moderator. Click here to review the message board rules.

[Mari333]

82. is that you Hank?????

http://3.bp.blogspot.com/_1V7wnZxPqok/STTVfnmar1I/AAAAAAAALl0/qidoYawsak8/s400/hank+paulson.jpg

[florida08]

88. rofl

[PoliSSHat]

90. Actually no...

But I might've worked at the institution in question for a little while. For better or worse, I have a pretty good background with CMBS, RMBS, and CDOs as well. So, if anyone wants to ask me any questions, holler away.

[DemReadingDU]

51. Blankfein next

[florida08]

53. he should

be wearing leg irons

[Mari333]

54. oh he is all ready isnt he

making it sound like he did nothing wrong

[florida08]

56. he might be a little slicker than the others

[DemReadingDU]

58. Shocked that SEC filed suit

GS clients need to trust Goldman Sachs, or they can't survive.

[BootinUp]

57. Blankfein up.

[DemReadingDU]

59. Levin troubled that GS sold securities

but didn't tell the clients that GS was shorting the securities (betting against them)

[BootinUp]

60. Levin listing sales that raise ethical questions of conflict of interest. nt

[Mari333]

62. piece of crap!! I love Levins phraseology based on the emails

[DemReadingDU]

65. Buyer beware

GS sells securities to clients, what the clients want.

[florida08]

67. are you hearing this guy!

Anything you buy it's yours and you own baby..not our responsibility anymore. Can you imagine our SS being in the market?

Crap is right Senator Levin..shitty deal

[DemReadingDU]

70. Blankfein doesn't understand betting against securities that were sold to clients

How did he become CEO?

[go west young man]

68. Blankfein has previously said that he is doing god's work.

Look's like the Lord is working in some mysterious ways on his sorry ass right now. Lord Levin that is.

[MerryBlooms]

71. No morals required. Wow, these guys just keep digging. n/t

.

[DemReadingDU]

75. No obligation to tell clients anything

Goldman has their opinion, but why should they tell their clients their opinion. Clients buy securities what clients want, not based on GS opinions.

[MerryBlooms]

83. The problem is them leveraging against their own clients

Encouraging customers to buy high rated securities, hand picked to lose by Goldman - that's a serious accusation. That's more than just 'innocent' opinion on a product.

[PoliSSHat]

95. Dont let the facts stand in the way of your argument....

Paulson is the only party that got to choose the collateral. GS is getting accused of structuring it and not telling counterparties that Paulson was on the other side. Goldman was on the same side as other counterparties that lost billions.

[MerryBlooms]

101. And don't let your bias in favor of the company you worked for,

stand in your way of seeing fraud.

The hearings focus haven't been limited to that one transaction. I asked before, did you watch/listen to the panels from last week?

Goldman was on EVERY side in some of these transactions without disclosure. By all means, continue your tap dance along with the GS panels - you're definitely in lockstep with them.

[PoliSSHat]

104. Merry...I Love you....but....

By definition, being on "every side of some these transaction without disclosure" is absolutely ridiculous. Was Goldman hedged? Yes. Perfectly hedged? Definitely not. Being the originating bank in these CDOs requires you to take a proprietary stake in the deal. If you didnt, no one would buy the bonds. Its like saying....buy this car, but it will break down in 20 miles. While the hypothetical car did break down, Goldman bet that it wouldnt and lost a lot of money doing it. Others made money.

[MerryBlooms]

106. They also bet it would break down and they made gobs of money.

at times with these practices.

It's all so damn tragic and yes, I fully admit my emotions sometimes get the best of me now days.

lol, my quitting smoking right now was really lousy timing.

[Tansy_Gold]

99. Aren't hte clients PAYING GS for their opinion?

if they didn't need GS' opinion, they could make their own deals. They go to GS, or any other investment advisor and PAY for advice.

I mean, isn't that like basic??? And does GS not have an obligation to deliver honest service for honest payment?

What am I missing here?


Tansy Gold, who needs to walk away from the C-SPAN and get back to the real work.

[DemReadingDU]

103. unless a client goes to GS and wants a CDO that makes 10%+

Then GS shows them some CDOs and the client picks the one he likes.

:shrug:


P.S. I have no idea how these investment banks operate.

[FarCenter]

105. Only if GS is acting as a financial advisor, but not when it is a dealer

You wouldn't ask the blackjack dealer whether you should take another card.

[McCamy Taylor]

72. Everytime the words "betting against" are spoken, GS goes down. Weeee!

[BootinUp]

77. lol nt

[florida08]

73. I realize it's the market and risk is automatic

but people like me don't have inside info on predator lending..90% home loans being stated income buys..it's really slanted against us

[global1]

78. I See Fred Armenson On SNL Playing BlankFein Next Week In The Opening......

bit on SNL. This guy is precious. We've done nothing wrong. We're the best thing since sliced bread. What a jerk!!!!!!!

[DemReadingDU]

84. McCain - you did get 10B of tax payer money

[global1]

86. I Got To Give It To McCain - He's Doing An Admirable Job Of Grilling This Guy......

I don't like or respect McCain - but in this case he's doing alright.

[FarCenter]

91. McCain seems to be confused

[Mari333]

94. he is doing better then I thought he would

[DemReadingDU]

89. Blankfein explaining a CDO, and synthetic CDO

synthetic CDO - doesn't have actual securities, but indexes to securities for a particular risk (more money)

[FarCenter]

92. Therefore, a synthetic CDO must by definition have some parties short and some long

[FarCenter]

96. Most of the mortgages in these securities were originated by savings and loans

or by mortgage brokers, not by community banks.

And of course, McCain should be familiar with savings and loans after the Keating scandal.

Idiot.

[Mari333]

100. thanks for reminding me of the keeting scandal

so many coverups and bailouts I cant keep track

[florida08]

102. true

Countrywide..Washington Mutual

[FarCenter]

98. The "ethics" of professions differ from commonly understood ethics

For example, lawyers are required by their code of ethics to defend clients who they believe to be guilty.

[DemReadingDU]

107. 9/22/08 GS became bank holding company vs investment bank

[DemReadingDU]

108. Coburn: Have you ever had any conversations in the past 9 months with anyone at Treasury

about financial reform

[florida08]

109. Coburn

is still trying to blame it on subprime..but that was only a small part. The problem was they were way over leveraged..when investors
started dumping liquidity dried up..but when a bank is only required to keep 10% in a global market and your selling to everyone al over the world..insurance being sold unethically..

:rant:

[DemReadingDU]

110. Why did GS release Tourre's emails, and no one else?

[Subdivisions]

111. Blankfein draws a blank: "Ummmm... the buck stops with me.... ermmm...

but I'm not...er...I wasn't involved in that decision. Ummm...what?"

[DemReadingDU]

112. that was weird

[Subdivisions]

113. He just now did another 'Alberto Gonzales'. n/t

[DemReadingDU]

114. McCaskill asking about emails concerning selling off the cats and dogs

Blankfein - those are the small miscellaneous securities

[Mike 03]

115. The panel obviously doesn't understand what Goldman Sachs does.

I never thought I could ever imagine a time when I could defend these bastards, but Goldman did what any logical investor would do.

[DemReadingDU]

116. About that CDO that Paulson shorted

90% owned by ACA, and 10% owned by IKB. I believe this made the 'long' side. Paulson had the 'short'

Anybody else still listening?

[DemReadingDU]

117. Levin - These documents were not cherry-picked

They reflect the history of GS.

Adjourned.